Local officials complain at Capitol about inadequate PILOT money

Hartford - Municipal officials who said state aid to municipalities is inadequate voiced their concerns to legislators on the state's Appropriations Committee Wednesday, many of them focusing on funds distributed through the Payment in Lieu of Taxes (PILOT) programs for state-owned properties and nonprofit hospitals and colleges.

Though Gov. Dannel P. Malloy's $19 billion budget proposal for fiscal year 2015 includes a 7 percent increase in PILOT funds for cities and towns with nonprofit hospitals and colleges, his budget proposes flat-funding the PILOT program for state-owned properties.

Municipal leaders said the two PILOT programs have been flat-funded for years and that a large number of tax-exempt properties take up space that cannot be sold to for-profit companies. Ultimately, those who testified said they wanted the state to do a better job of funding municipal grants at the level required by state law.

During the committee meeting, representatives from the Connecticut Conference of Municipalities and municipal officials did not address the bill proposed by state Rep. Brendan Sharkey, D-Hamden, that would allow municipalities to tax properties that belong to nonprofit hospitals and colleges. After the meeting, East Lyme First Selectman Paul Formica and a CCM representative said that bill would need more evaluation before it could be supported.

Last week, Malloy said that he hadn't spoken with Sharkey about the issue and hadn't decided whether he supported the bill.

Formica said towns also have other concerns.

"The reason I am up here talking about PILOT is because last year, the discussion was to take the PILOT and turn it into education funding and eliminate it from cities and towns," Formica said. If the governor's budget proposal from last year had been approved, East Lyme would have lost $700,000 in PILOT revenue from the state for its two prisons, two National Guard camps and Rocky Neck State Park.

Mansfield Mayor Betsy Paterson, who is a former president of CCM, said she wanted the state to fund the municipal grants at the levels required by statute instead of providing temporary relief through grants such as municipal aid adjustment and municipal revenue sharing grants.

"We just think that the PILOTs across the state should get their fair share and not be subject to these maneuvers every year," Formica said.

In East Lyme, despite an increase in property values, the town will be getting $84,270 less in fiscal year 2015 than it received this year, which was $933,077, according to the governor's budget proposal.

The town supports the state park and prisons by sending public safety officials there when needed, Formica said. "We just want our fair share from whatever is supposed to be there," he said.

East Lyme is also scheduled to receive $40,548 from the nonprofit college and hospital PILOT program this year and $42,897 next year because of vacant properties owned by the Sheffield Scientific School of Yale University.

The legislature should put some of the budget surplus funds toward the state-owned property PILOT program, Paterson said. Mansfield is home to the University of Connecticut's largest campus, in Storrs.

She said her town has lost $2 million in funding from the state between the 2009 budget and the 2015 budget proposal.

According to state law, municipalities with state-owned properties are supposed to receive 45 percent of the taxes that would have been paid had the properties been taxable. Municipalities with state prisons are supposed to receive 100 percent. Currently, municipalities get about 23 percent from the state for both state-owned properties and prisons, said George Rafael, senior government finance analyst for CCM.

Municipalities with nonprofit hospitals and colleges are supposed to receive 77 percent of what the tax bill would be; Sharkey said they get about 32 percent.

The two PILOT programs have been flat-funded for five years. The state budgets $115 million for the nonprofit hospitals and colleges PILOT program, and Malloy's budget proposes increasing this amount to $123 million. The state budgets $74 million for the state-owned property PILOT.